Small Business Insurance Guide

If you are thinking about opening a small business, one of the most important things to consider is the type of insurance to purchase. Small business insurance is one area that most entrepreneurs do not think about in advance, but it can play a vital role in their success. Business insurance helps to limit the liability of the business owner in case of a lawsuit or injury. It can also protect his investment in property and equipment.

Function

• The purpose of small business insurance is to limit your liability and to hedge against the risks of owning a business. The risk of physical damage to your property and the risk that someone could be hurt on the premises are always present. You have to be concerned with injury to your employees and to your customers. By paying a regular premium to the insurance company, it agrees to step in and reimburse the business if a loss occurs.

Required Insurance

• Certain types of insurance may be required as a business owner. For example, you must have worker's compensation insurance if you have employees. This protects them if they are injured on the job. If you have vehicles for your business, you are also required to purchase auto insurance. In certain states, you also have to buy disability insurance for your employees in case they cannot work for an extended period of time.

Liability

• Liability coverage protects business owners if anything happens to a customer. For example, if someone falls and is injured on your property, this type of insurance will help pay for medical bills. If one of your employees does something that negatively affects a customer, this insurance could pay for the distress that is caused. The liability coverage component of business insurance limits the possibility of having to pay out a large settlement during a lawsuit.

Property

• Property insurance is another type of coverage that may be beneficial to business owners. This type of coverage provides assistance with any type of damage that occurs on your property. If your building is damaged in a fire or during a storm, this type of insurance kicks in and helps you repair the damage. This is an essential type of coverage to have, especially if you are buying a piece of property with a commercial mortgage.

Business Owner's Policy

• A business owner's policy is one of the most popular types of insurance. This policy bundles basic coverages, liability and property, into one package. You can also add on other coverages, like errors and omissions insurance or business continuation coverage. This type of policy allows you to pick and choose which types of coverage you want.